USPS caught between a rock and a hard place in Washington

As the bleak financial figures continue to emanate from the US Postal Service, dozens of US lawmakers are pushing to halt moves by USPS to downsize the US mail network. While apparently recognising the financial difficulties USPS is currently in, Senators and Representatives are lobbying to prevent cost-cutting and downsizing, in the belief that pension and healthcare restructuring can solve the major problems.

Today a group of 27 US Senators urged the Senate Committee considering major postal reform legislation to change their proposals to keep First Class Mail as a mostly overnight service, prevent the elimination of Saturday deliveries and stop wholesale closing of post offices and mail processing plants.

Yesterday, 111 members of the House of Representatives wrote to US Postmaster General Patrick Donahoe demanding a moratorium on post office closings until “flaws” are corrected in USPS retail network restructuring plans, as identified by regulators in December.

The calls came as President Obama revealed a $25bn aid package for the Postal Service yesterday, as part of the 2013 federal budget, which includes a proposal to end Saturday delivery in 2013, but which needs to be passed by Congress.

US Postmaster General Patrick Donahoe welcomed the President’s ongoing recognition of the plight of USPS yesterday, describing the Budget proposals as “helpful” in a short statement that did not oversell the possibility of the proposals being passed any time soon.

Separate postal reform bills are waiting to be considered in the floor of both the Senate and the House of Representatives at present, but USPS has said neither in their current forms would be enough to restore financial sustainability at the USPS.

Last week USPS recorded a $3.3bn loss for its latest quarterly results, covering a period considerably bolstered by the festive surge in parcels. The Postal Service is currently projecting a $14.1bn loss for the current fiscal year, and is set to run out of cash by October.

Senate

Today’s letter from Senators led by the independent Senator from Vermont, Bernie Sanders, expressed particular concern at the closing of rural post offices, end of Saturday deliveries and the potential loss of 220,000 postal jobs as the Postal Service seeks to slim down its network to match the 25% loss of mail volume that has occurred since 2006.

The Senators suggested that by allowing USPS a $10bn-or-more rebate from its pension surplus, and the end of its $5.5bn annual requirement to pre-fund future healthcare liabilities for retirees, that financial stability could return to the Postal Service without radical cutbacks being made in infrastructure or mail service standards.

“We believe that this financial crisis can be solved in a way that does not substantially slow down the delivery of mail and harm rural America,” said the Senators in their letter.

Along with the financial assistance for USPS, the Senate group urged support for Sanders’ proposal that a commission of “entrepreneurs, innovators, postmasters, experts in the mailing industry, and labour” develop recommendations for a new USPS business model within six months, to be implemented by USPS within three years.

House

Yesterday’s letter from 111 Congressmen in the House echoed the letter from the Senate in recognising the “acute” financial difficulties at USPS, but unlike the Senate letter did not go as far as proposing a solution.

USPS has already agreed a moratorium on post office and mail plant closings, as agreed with another group of US Senators, running until May 15.

The House group, led by New York Congressman Maurice Hinchey, requested that a moratorium on post office closures should continue until the Postal Service can gather complete data on all its post offices, branches and stations, clarify revenue data and rethink the criteria for closing under-used post offices.

While the current USPS moratorium on closures has allowed the review process to continue, the House group wants all facility reviews to stop as well.

Hinchey said: “The data the US Postal Service used to select which post offices it would consider for closure was incomplete, inaccurate and inappropriately targeted rural post offices.

“I’m calling on the Postmaster General to halt all discontinuance studies. Unless they start operating with better information, they could do more harm than good.”

Labour

America’s postal unions are appearing effective at the moment in keeping pressure on Congress to delay consideration of the current postal reform proposals, and protect postal jobs.

The American Postal Workers Union is currently pressing members to contact their local Senators and Representatives to oppose reforms to federal retirement benefits.

APWU legislative and political director Myke Reid said the Senate postal reform bill (S.1789) “would inflict severe, long-term damage on the Postal Service, and lead to the closure of hundreds of mail processing centres and thousands of post offices”.

He suggested the postal reform bill in the House (H.R.2309) would “destroy the Postal Service as we know it”.

The National Association of Letter Carriers yesterday said a “durable fix” was needed for the US Postal Service, but its president Frederic Rolando said the solution was merely to remove the USPS pre-funding obligation for future retirees.

Rolando said the recent $3.3bn quarterly loss at USPS would have been a profit had it not been for the pre-funding requirement.

NALC poured cold water on the President’s rescue package, particularly on the “counter-productive” proposal to end Saturday deliveries, which Rolando said would see USPS business shift to higher-priced private sector alternatives, particularly on a day most suited to home delivery of e-commerce packages.

“It’s unfortunate that President Obama has bought into the Postmaster General’s push to dismantle the universal network,” said Rolando. “We will work with our friends in Congress, our customers and our allies in the business community to strike this proposal from the budget before it comes up for a vote.”